The magic that's missing from Alibaba's mobile gaming strategy

Shane Schick

Talk may be cheap, but Alibaba is getting ready to start having some very expensive conversations with mobile game developers. 

Last month, according to a report in the South China Morning Post, the Chinese e-commerce firm said it was launching a new platform for developers to create mobile games, the kind of announcement that might not have gotten a lot of attention were it not for the pricey incentive that came along with it. Alibaba said that it would revise its revenue-sharing model so that developers will get 70 percent of the revenues from sales of their games. The remaining 30 percent will be split between Alibaba, which will retain 20 percent, and 10 percent that will be donated to educational charities. This in steep contrast to the 10 percent Chinese game developers get from sales of their products today. 

Before anyone gets too excited, though, some caveats are in order. First of all, this is obviously not something that Alibaba is doing out of the goodness of its corporate heart. It's a marketshare play to catch up with its much more successful rival, Tencent. This is also a phenomenon more local to China, a market where traditional behemoths like Apple and Google are growing but have nowhere near the presence or clout that they enjoy among North American developers. Finally, this may be less about generating more gaming activity in and of itself than it is a way to get closer to potential e-commerce customers in China. Both Alibaba and Tencent are placing a huge emphasis on electronic payment strategies, so app users may be more of a means to an end.

While it seems unlikely that Alibaba's move will inspire any similar revenue-sharing generosity between app store providers and developers closer to home, the real question is whether more money will be enough to cement developer loyalty. The growing trend across the mobile gaming industry worldwide has been to focus less on the monetization strategy itself than the tools and techniques you can use to drive the revenue. Mobile analytics and mobile backend-as-a-service offerings are designed to make developers less reliant on basic exposure in app stores. By gathering information on engagement, abandonment and other indicators, developers should be able to forge their own destiny. To their credit, both Apple and Google have been doing a lot of work recently to offer their own tools in this area. 

As an e-commerce giant, Alibaba probably sits on a treasure trove of consumer data that would help scores of mobile game developers better identify and target those who would be perfect candidates for using their apps. If mobile game developers build on Alibaba's platform and make little money, that 70 percent isn't going to mean a lot. The company is making a lot of noise by ostensibly giving more back to its community, but over time developers in China and nearly everywhere else may come to realize it's not about what the revenue share split should be, but what the knowledge split should be. --Shane